SYNA: Upside Even without a ‘Galaxy S IV’ Win, Says Pac Crest

By Tiernan Ray

Pacific Crest chip analyst John Vinh today raised his rating on shares of touch-sensor controller maker Synaptics (SYNA) to Outperform, and set a $40 price target, writing that the company has made “impressive” gains in the smartphone and tablet market, including in tablet products from Samsung Electronics (005930KS), which could even lead to further upside if Synaptics winds up in a future “Galaxy S4” smartphone, he thinks.

Synaptics is probably in forthcoming phones from Research in Motion (RIMM) and Google’s (GOOG) Motorola unit, Vinh thinks, which means the company is in all the phones that counts, outside of Samsung’s phones and Apple‘s (AAPL)iPhone:

Our research indicates that Synaptics has won flagship smartphone designs at RIM and Motorola/Google in 2013. This will give the company a dominant position at every major OEM,including LG, HTC, RIM, Nokia, Motorola/Google and Sony, leaving only Apple and Samsung(which is yet to be determined). We believe Synaptics has secured these wins through superiorperformance on its latest-generation ClearPad touch controller solutions. Feedback from thesupply chain indicates that Synaptics provides one of the thinnest one-glass solution touchmodule stack-up in the industry. As OEMs strive to create thinner smartphone form factors andkeep pace with Apple, we believe this becomes an increasingly important criteria.

In addition to “strong demand” for Samsung’s Galaxy Tab 2 tablet, featuring the company’s chip, there’s a prospect Synaptics could be designed into the next version of Samsung’s Galaxy line of smartphones, though the company doesn’t need that win to do well, he thinks:

Despite improving sentiment, winning the Galaxy S4 would still represent significant upside to estimates and expectations in our opinion. We believe most investors believe Atmel (ATML), has won the Galaxy S4, as ATML’s performance is up almost 40% since speculation began regarding the Galaxy S4. During the same period, SYNA’s performance is only up 16% and has only outperformed the SOXX by 8% [...] While investors have been heavily focused on the Samsung Galaxy S4 opportunity, we still believe that Synaptics will continue to gain share at Samsung and expect Synaptics to ramp several additional smartphone designs in 2013. We also continue to believe strong demand for Samsung’s Galaxy Tab 2 tablet to be a positive tailwind for the company. We previously noted that we expect Samsung to ship five million Galaxy Tab 2 units in Q4 on increasingly strong demand trends.

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There are 6 comments

JANUARY 14, 2013 8:53 P.M.

James wrote:

Apple could be releasing 12 iPad mini models this calendar year targeted mainly for Chinese, and the Siri Chinese users. Apple will price them extremely aggressively mainly to solidify the China market which is by far the world's biggest market and also the iPad's birthplace, as well as the field testing of Siri's Chinese language fluency. Even Barack Obama has to speak some Chinese because of China's global influence. Apple should expect 700 ~ 800 million units of iPad mini sales for the calendar years 2013-2014.

JANUARY 15, 2013 12:24 A.M.

Anonymous wrote:

When I visit Apple Stores I often see the masses crowding around the iPad tables. Perhaps it's a sign that the iPad has finally come to displace the smartphone genre? I am very excited about the newer iPads, especially the iPad Mini.

JANUARY 15, 2013 12:26 A.M.

Anonymous wrote:

People do love the iPad more than the iPhone. I have recently noticed too.

JANUARY 15, 2013 12:35 A.M.

James wrote:

Indeed I see China being a billion unit iPad market by 2014. China manufactures the iPad after all, the logistics are a lot cheaper and easier for China to deliver the iPad versus other brands, and iPad carry the world's most valuable brand in Apple. iPad offers the world's most fluent Chinese natural language processing in Siri, and China is delivering a lot of voice apps itself that will most definitely run on the iPads. By 2015, all the computers and mobile devices in China will speak fluent Chinese on Apple Siri machines. I see Apple selling billions of units of Apple Siri hosted computers and mobile devices in China making China the most advanced voice apps enabled nation on Earth, far surpassing every other nation including USA.

JANUARY 15, 2013 12:39 A.M.

James wrote:

USA lacks the clout and the power to push for the next frontier voice apps that will totally revolutionize the world in the way Man relate to Machines and Apps. This is a crucial revolution for Mankind as China takes over global leadership from the USA.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.